Monthly Issue

59
A successful investment is a
result of detailed homework and
keen attention. To achieve this
success there are certain things
one needs to consider no matter
how big or small the amount to be
invested is. Sometimes, a
seasoned investor may overlook
some of the essential factors
while investing (in spite of years
of experience) and on the other
hand, an amateur might make the
best investment decisions in the
most challenging financial
circumstances. The key to
investment is to remember
factors that affect one's
investment and apply a strategy
that justifies all these factors. In
essence always keeping the
basics in mind.
Anup Bagchi
MD & CEO
ICICI Securities Ltd.
Factors like investor's age, tenure of the investment, risk tolerance,

market volatility, national and international markets, liquidity, ability
to outpace inflation, asset allocation and similar components are
largely responsible for investor's portfolio performance. Each one of
this impacts the investment at certain level and plays a crucial role in
determining its success.
With cost of living increasing at a rapid pace it is necessary to make
your money work for you at the same speed. The sooner you start
investing the longer and larger you benefit from it. Investing at an
early age maximizes the investment amount by compounding
returns over long period of time. If you have given considerable time
to your investment, the value is bound to appreciate when returns
are averaged out overcoming market highs and lows. The duration
for which you stay invested is an essential factor that decides
outcome of your investment.
Secondly, the purpose of investing may not be exact same for two
individual investors and same goes for their risk appetite. What
seems like an aggressive investment avenue to you might be lowrisk option for someone else. The reason why risk component is of
great significance is that risk and returns are directly proportional to
each other. It is important to choose investment that best suits one's
risk profile and neither overdoing nor underdoing it.
Another most important point to remember here is asset allocation.
Whether you pick equity/stock, debt, real estate or gold or
combination of these it makes considerable impact on your
investment returns. Sticking to only one particular asset because it
performs well today may boomerang if market trend goes against
this asset, leaving your investment negated. Thus putting money
across diversified assets has proven remarkably lucrative in recent
times. While deciding upon an asset, it is advised to monitor longterm consistency of its performance rather than getting lured by
recent output.
Let's also not forget investments in equity, mutual funds,
commodities, gold etc. are directly affected by market conditions.
Movements of foreign stock market are partially or equally
responsible for fluctuations in Indian market trends. A wise investor
should always take both national and international market scenarios
in account while taking the final investment leap.
Ease of liquidity is another important element to remember which is
very often overlooked by many investors. Ideally, an investor should
always check upon these factors whenever investing, irrespective of
the size, time or nature of the portfolio. The ultimate secret of a
successful investment lies within the strategy outline behind it. Once
that is figured out well, your portfolio will always remain healthy.
Our message remains the same 'Keep investing and stay invested
for your life goals.' Through this magazine and our website
www.icicidirect.com we want to make an earnest attempt to partner
with you in setting and achieving your financial goals. Give us an
opportunity to serve you, walk into any of your Neighborhood
Financial Superstore and talk to us.
ICICIdirect Money Manager
September 2016
In order to make most of the opportunity it is important for an

investor to understand how his investment works and what
exactly influences its overall performance. Starting an
investment is more than checking rate of returns and following
current financial trends. We are commonly advised to update and
enhance our investment portfolio on regular basis. However,
some key basics of investment remain same irrespective of these
enhancements and modifications.
There are various things which collectively affect the result of an
investment and it is necessary to remember them whenever
starting an investment. Our cover story highlights some of these
important points to follow while making an investments.
Questions like where to invest, for how long and through which
medium? Are extremely crucial when it comes to investing to
achieve your financial goals. We have listed down such things to
be remembered while investing.
Since mutual fund investment has emerged as a widely popular
and favorite investment vehicle for majority of investors, we have
added a special feature about things to consider before investing
in mutual funds. In talk with Mr Sunil Singhania, CIO, Equity
Investments, Reliance Mutual Fund, this month's Money
Manager answers some of the basics but highly important
questions rising in mutual fund investor's mind.
We are also providing descriptive analysis of latest top mutual
funds recommended by our research team. Through this month's
edition we attempt to improve user's investment experience by
talking about elements that influence investment decision
making process and also the future scenario.
Your magazine is now also available on www.magzter.com, a
digital newsstand.
Editor & Publisher
Abhishake Mathur, CFA
Editorial Board
Sameer Chavan, CWM, Pankaj Pandey
Editorial Team
Nithyakumar VP CFPCM, Sachin Jain, Research Team
September 2016
MD Desk.........................................................................................1
Editorial..........................................................................................2
Contents.........................................................................................3
News.............................................................................................4
Stock Ideas: Biocon and MRPL.....................................................5
Flavour of the Month: It always a good time to jog back to the
basics once in a while to keep the focus as far as investing is
concerned...................................................................................11
Tete-a-tete: Understanding Mutual Funds as investments An
interviews with Sunil Singhania, CIO, Equity Investments,
Reliance Mutual Fund.................................................................22
Ask Our Planner: Rental income on property vs interest income
on FD Your personal finance queries answered.......................26
Mutual Fund Analysis: Investing in Mid-cap Funds It's time to
remain constructive in equity markets and accumulate for the
2-3 years. Here are three funds to consider..............................30
Mutual Fund Top Picks:...................................................................42
Updated Equity Model Portfolio........................................................43
Quiz Time:......................................................................................49
Prime Numbers..............................................................................50
Premium Education Programmes Schedule.......................................54
September 2016
India's economy growth

India's economy grew at its slowest pace in five quarters in the April-June
period, falling below expectations amid sluggish investment and farm output.
That dents the prospects of hitting the 8 per cent mark for the full financial year
but the government is hopeful that a bountiful monsoon and increased pay and
pensions along with various structural reforms could still take growth closer to
that figure. Gross domestic product (GDP) rose 7.1 per cent in the first quarter,
reaffirming India's position as the world's fastest-growing major economy, but
sharply lower than 7.9 per cent in the January-March period.
Courtesy: The Economic Times
FATCA: Mutual fund accounts would not be closed

Mutual fund investors who haven't completed the formalities of complying with
FATCA or Foreign Account Tax Compliance Act can breathe easy. Your mutual
fund accounts would not be closed by the fund houses for now. The
government has asked financial institutions to not close accounts which are not
FATCA compliant for a while. The deadline to comply with FATCA was August
31. A press release from the government said it will announce the new deadline
in due course.
Canada's Province of British Columbia to issue a masala bond

Canada's Province of British Columbia has become the first foreign government
entity to issue a masala bond by floating Rs 500 crore rupee denominated
overseas bonds on the London Stock Exchange. The bond raised $75 million
(about Rs 500 crore) with 6.62 per cent semi-annual yield, securing high-quality
investor support from across Europe, Asia and America. It is a AAA rated bond
by the three major rating agencies and will mature on January 9, 2020, The
Province of British Columbia said in a statement on Friday.
EPFO subscribers may get a lower interest at a rate

Over 4 crore EPFO subscribers may get a lower interest at a rate of 8.6 per cent
on their PF deposits for current financial year as Labour Ministry is expected to
toe the Finance Ministry line to cut the rate. Employees Provident Fund
Organisation (EPFO) had provided 8.8 per cent rate of interest on EPF deposits
for 2015-16 despite Finance Ministry's ratification for 8.7 per cent. The Board
fixes the rate of interest for a financial year and it is approved by its advisory
body Finance, Audit and Investment Committee (FAIC).
September 2016
STOCK IDEAS
Biocon - Biosimilars progress getting momentum

Company Background
Biocon was established in 1978
by first generation entrepreneur
Dr Kiran Mazumdar-Shaw.
Unlike most pharma companies
that are chemical based, Biocon
has carved out a niche in the
morecomplex biotechnology
field. Over the decades, the
company has successfully
evolved into an emerging global
biopharma enterprise, serving
its partners and customers in
over 75 countries. As a fully
integrated biopharma company,
it delivers innovative
biopharmaceutical solutions,
ranging from discovery to
d e v e l o p m e n t a n d
commercialisation. In 2004, it
came out with its maiden IPO.
but with higher profitability in

this segment such as moving
into formulations and filing own
ANDAs, 505 (b)(2) filings, etc. It
has already filed seven or eight
ANDAs cumulatively. These
include complex generics and
injectables. We expect the small
molecules segment to grow at a
CAGR of 11.6% to ` 1930 crore
in FY16-19E.
Well poised to capitalise on global
biosimilars opportunity
The biologics segment includes
novel biologics and biosimilars,
including rh-insulin, insulin
analogs, monoclonal antibodies
and recombinant proteins. This
segment accounts for ~12% of
the turnover. Biocon is mainly
focusing on following therapies diabetology, oncology and
immunology. The company has
invested heavily in this space
over the last two or three years,
especially the Malaysian facility.
The progress, so far, is
encouraging with launches in
emerging markets, Glargine
launch in Japan and filing
arrangements in the EU and US.
We expect Biologics togrow at a
CAGR of ~50% to ` 1158 crore
in FY16-19E.
Investment Rationale
Small molecules segment likely to
get boost from ANDA launches
The small molecules segment
accounts for ~42% of the
turnover and comprises APIs
like statins, immuno suppressants and specialty APIs and
also includes generic formulations business. This vertical is
witnessing pricing pressure in
some products. The company is
exploring fewer opportunities
September 2016
STOCK IDEAS
Research services (Syngene) to
maintain growth momentum
Biocon's research arm Syngene
contributes ~32% to its
turnover. Syngene is the
contract research organisation
(CRO) arm of Biocon with
proven capabilities. The
company caters to 256 clients
including eight out of global top
10 global players. This segment
has been consistently growing
at 20%+ rate. Recently, it has
been the major growth driver for
the company as biopharma
segment is slowing down. We
expect revenues to grow at a
CAGR of ~22.4% to ` 1945
crore inFY16-19E.
the biosimilars front over the last

six months have demonstrated
the capability in the biosimilars
space. What has cemented
Biocon's position as perhaps the
best placed candidate among
Indian companies is the series of
positive outcomes from
developed markets, be they
approval and launch of Glargine
in Japan or presentation of
Trastuzumab data to ASCO or
review acceptance from EMA.
The launches in emerging
markets are also getting
momentum. This is likely to
improve the share of biosimilars
in total revenues from 10% in
FY16 to 20% by FY19. With the
Malaysian facility getting ready
for global filings, we believe the
future bodes well for the
company on the biosimilars
front. It will also provide an extra
lever for growth besides
Syngene and branded
formulations. Although the
actual biosimilar launches in EU
(and US) are some distance
a w a y, w e b e l i e v e t h e
acknowledgement from
developed market regulators is
likely to improve the valuation
perspective. Our SOTP target
price is now ` 1030.
Branded formulations growth space

The branded formulations
business includes the finished
dosage business in India and
overseas including UAE. It
constitutes 15% of the turnover.
It comprises Indian domestic
formulations. Biocon owns 80+
brands encompassing therapies
like diabetology, oncology,
n e p h r o l o g y, c a r d i o l o g y,
immunotherapy, comprehensive care and bio-products.
Biosimilars progress getting
momentum
Encouraging developments on
September 2016
STOCK IDEAS
Key Financials
(YoY Growth)
FY16
FY17E
FY18E
FY19E
3,485.4
4,273.6
5,059.2
5,986.3
EBITDA
820.0
1,065.5
1,274.7
1,555.5
Adj. Net Profit
450.3
666.4
767.6
963.8
Adj. EPS (`)
22.5
33.3
38.4
48.2
FY16
FY17E
FY18E
FY19E
Revenues
Valuations Summary
(x)
PE(x)
19.6
26.6
23.1
18.4
Target PE (x)
45.7
30.9
26.8
21.4
EV to EBITDA (x)
11.1
14.7
15.0
16.4
Price to book (x)
9.1
13.1
14.8
17.4
RoNW (%)
11.5
8.7
7.0
5.5
RoCE (%)
4.4
3.9
3.5
3.0
Stock Data
` 17709 crore
Market Capitalisation
` 2457 crore
Debt (Fy16)
` 1921 crore
Cash (Fy16)
` 18245 crore
EV
52 week H/L
940/431
Equity capital (`Crore)
` 100 crore
Face value (`)
MF Holding (%)
3.07
FII Holding (%)
15.2
Key risks include:
Lispro and Aspart). Four of its

biosimilar products (Trastuzumab,
Pegfilgrastim, Adalimumab and
Insulin Glargine) have already
reached the critical milestone of
global Phase III clinical trials. The
company is also planning to start
US and EU filings from FY17 with
Mylan. In any circumstances
backtracking by Mylan may
increase the R&D cost sharply.
Backtracking by Mylan may increase

the R&D cost sharply
Biocon entered into a partnership
with Mylan for six biosimilar
p r o g r a m s ( Tr a s t u z u m a b ,
Pegfilgrastim, Adalimumab,
Bevacizumab, Etanercept and
Filgrastim) and three insulin
analog programs (Glargine,
September 2016
STOCK IDEAS
MRPL Entering the complex league

Company Background
Mangalore Refinery &
Petrochemicals Ltd. (MRPL), a
standalone refinery with a
capacity of 15 mmtpa, has
completed and commissioned
its Phase III expansion and
upgradation project, to enter
the league of complex
refineries. While the capacity
of MRPL has already increased
from 11.8 mmtpa to 15 mmtpa,
the commencement of
operations at all the secondary
processing units has enhanced
the complexity of the refinery
from 6 to ~10. The operational
efficiencies that have kicked in
due to higher complexity will
boost the refining margins
from US$ 5.3 per barrel in Fy16
to US$ 6.9 per barrel & US$ 6.3
per barrel in FY17E & FY18E,
respectively. We expect MRPL
to grow at a CAGR of 41.5% in
EBITDA over FY16-18E on the
back of higher refinery
complexity, better crude
sourcing and increased
operational efficiency. We
expect the company to report
net profit of ` 1993.9 crore and
` 2105.5 crore in FY17E &

FY18E, respectively against a
loss of ` 1148.2 crore in Fy16.
We have a BUY rating on the
stock.
Investment Rationale
Strong GRMs growth will aid future
profitability
Higher complexity on
commissioning of Phase III
project is leading to an
increase in distillate yield from
~76.5% to ~80.1%, better
capability to handle heavier &
sourer crude and production of
higher margin value added
products. We have estimated
GRMs of US$6.9/bbl and
US$6.6/bbl for FY17E and
FY18E, respectively against
GRMs of $5.3/bbl in FY16. The
core GRMs premium over
Singapore GRMs benchmark is
expected to average $1.5/bbl
and $0.4 bbl against a discount
of $2.3/bbl in 2016. The core
GRMs for are strengthened
with the flow of products such
as Polypropylene and Pet Coke
from the phase III secondary
units and from the
8
September 2016
STOCK IDEAS
polypropylene unit. We expect
continued improvement in
core GRMs on account of
better crude sourcing mix and
higher efficiency. However, the
overall GRMs going ahead are
dependent on the strength of
the global product cracks.
Improvement in global cracks to

remain the key
Overall, MRPL has the lower
policy leverage and lower
gearing on the balance sheet
among PSU refineries. With
the improvement in
operational performance, we
expect the standalone
company to deliver profits and
thus creating value for
shareholders in the coming
years. The performance of the
O N G C M a n g a l o r e
Pe t r o c h e m i c a l s L i m i t e d
(OMPL) remains crucial in
determining the overall
company performance. For
FY16, OMPL posted revenue of
` 4187.6 crore and a loss of `
875.4 crore. However, the
management has indicated
that its performance would
improve in the coming years. A
scheme of amalgamation of
MRPL with ONGC Mangalore
Pe t r o c h e m i c a l s L i m i t e d
(OMPL) has been proposed for
approval of various regulatory
authorities. We value the stock
at 6x FY18E EV/EBITDA
multiple and OMPL at `
7.6/share to arrive at a target
price of ` 105.
Expect higher capacity utilisation

in combination with more value
added products
The throughput for FY16 came
in at 15.7 mmtpa, leading to
capacity utilisation of 104.6%.
The MRPL Phase III has been
operating optimally now, with
its new 440 KTPA
polypropylene unit
commissioned in H1FY16.
Higher complexity on
commissioning of phase III
project will lead to an increase
in distillate yield, better
capability to handle heavier &
sourer crude and production of
higher margin value-added
products. The polypropylene
unit continues to contribute to
the improvement seen in the
GRMs. We expect throughput
of 15 mmt and 15.2 mmt for
FY17E & FY18E, respectively.
September 2016
STOCK IDEAS
Key Financials
(YoY Growth)
Net Sales
FY14
FY15
FY16E
FY17E
1,120.4
1,530.1
1,896.1
2,341.3
EBITDA
141.9
216.6
255.6
309.7
Net Profit
70.1
100.4
124.7
159.7
EPS (`)
13.7
19.6
24.3
31.1
(x)
FY14
FY15
FY16E
FY17E
P/E
30.6
21.4
22.2
17.4
Target P/E
35.8
25.1
26.0
20.3
EV / EBITDA
20.8
14.3
11.0
9.0
Valuations Summary
P/BV
3.4
3.0
2.2
2.0
RoNW (%)
11.2
14.0
9.9
11.3
RoCE (%)
17.6
21.0
17.0
18.8
Stock Data
(` crore)
Market Capitalization
2,770.6
Total Debt
211.3
Cash
74.2
EV
2,907.7
52 week H/L (|)
550 / 346
Equity capital
51.3
Face value
| 10
FII Holding (%)
6.4
DII Holding (%)
13.8
Key risks include:
Volatility in crude oil prices & exchange rate

MRPL imports majority of its crude oil
requirement and hence, it is exposed
to the risk of volatility in prices of
international crude oil & petroleum
products along with foreign exchange
volatility. Although depreciating
Indian rupee (|) against the US dollar
is beneficial for the refining margins,
the exposure to foreign loans (ECB)
has a negative impact on the
profitability of the company.
Decline in refining margins

The global economic situation and
demand-supply balance plays a very
important role in determining the
gross refining margins. Any
slowdown in the global economy &
weaker demand will lead to decline in
gross refining margins and will have a
negative impact on the profitability of
the company.
10
September 2016
FLAVOUR OF THE MONTH

Important points to remember while investing
It always a good time to jog back to the basics once in a while to keep the focus as
far as investing is concerned. In our cover story this month we look at some of the
basics of investing like understanding asset classes, understanding risk and
return and how one should approach investing. This is a relevant read anytime or
any stage of your investment cycle.
Understanding Asset Classes

Investing is not just about how
much you invest, but more
importantly, where you invest.
And that's where the asset
classes come in. It is absolutely
important that you know what
you are investing in. You need
to have a clear understanding
of asset classes.
Companies require a lot of

funds for growth, expansion,
and regular operations. The
funds can be gathered in two
ways: taking a loan from a
financial institution or selling a
portion of the company by
issuing shares. The shares are
issued to the public, people
who wish to invest their
money. When you buy some of
these shares, you hold a
certain stake in this company.
The stake is equivalent to the
amount of shares you buy. This
is also called equity.
When similar types of

investments are grouped
together, they form an asset
class. Investments within asset
classes have similar
characteristics and market
behaviour. They usually face
the same tax rates and are
subject to similar laws. The
risk-return trade-off is also
similar for investments within
each asset class. You need to
have the right combination of
asset classes, to optimally
reduce risk and get maximum
returns.
With these shares, you can

share in the profit earned by
the company. You also become
liable for any loss that it may
incur. The more stocks of a
company you buy, the more
your share in that company
increases. To get the maximum
benefit from your investment
in equity, you should invest for
the long term.
There are six main asset classes.

Here's a look:
Equity (stock or share)
Risk-return trade-off: Equity is

a high-risk, high-return asset
11
September 2016

class. But investors can expect
more returns from this asset
class than from any other.
entities promise to pay a

specific interest rate in addition
to the invested amount after a
specified duration. Your funds
are in safe hands and you know
the expected returns from this
investment. You will get the
promised returns at the end of
the period regardless of how
the markets or the entity
performs.
Effect of inflation: Equities are

a smart way to mitigate your
inflation risk. To earn returns
that safeguard against
inflation, you must invest in
equity. Over the long term, the
rate of return offered by equity
exceeds the rate of inflation. It
helps you build wealth for the
future.
Opt for this asset class to meet

your short-term financial goals.
The assured returns can help
you meet your goals, as you
are not exposed to any risk.
Earning profit:
o Capital appreciation: when
the price of the stocks you
purchased increases
Risk-return trade-off: This is a

low-risk, low-return asset
class. Debt investments give
you a fixed rate of interest on
your principle amount, but this
is lower than the equity rate of
return. You do not get to cash
in on a good market
performance. However, the
security offered protects you
against the losses you may
incur in equity investments.
o Dividend: payments made

periodically when the
company earns a profit
o Return on investment: the
total amount received from
capital appreciation and
dividends
Equity vehicles: Stock
exchange, mutual funds, unitlinked insurance plans, and
pension schemes are common
vehicles for holding equity.
Effect of inflation: The inflation

rate may eat into the returns
expected from debt
investments. This can happen
if the rate of inflation exceeds
the interest rate offered by the
debt instrument. Thus, it
Debt
In debt investments, investors
loan their money to
organisations, banks, or the
government. In return, these
12
September 2016

affects your purchasing power.
Earning profit: Investors earn a
profit in the form of interest on
the principle amount invested.
there is no or negligible risk in

investing cash, it faces a high
inflation risk. If you keep cash
with you, it will not earn any
interest. Your savings account
will pay you interest in the
range of four to five per cent. If
the inflation rate is higher than
this, your real return will be
negative. In other words, the
real worth of your cash will be
lower.
Debt vehicles: Fixed deposits,

public provident fund, national
savings certificates, and
government bonds are
common debt vehicles.
If you are a conservative
investor and want to take on a
minimal risk, debt is a suitable
asset class.
Earning profit: Cash offers zero

profit as an asset class. You
may earn some small returns
from the interest on some cash
vehicles.
Cash
Cash is the most liquid asset
class. You can access cash as
and when you need the money.
But the basic purpose of cash
differs from that of other asset
classes because it gives
negligible or no returns. It is
used to carry out transactions,
held as a precautionary
measure, or used to invest in
other asset classes.
Cash vehicles: Savings

accounts, short-term fixed
deposits, and liquid funds are
common cash vehicles.
As an investor, you must try to
keep your cash balance as low
as possible based on your
need and requirements.
Real Estate Real estate can
include residential and
commercial buildings, or even
vacant land. Investors buy real
estate from builders or current
owners. Other asset classes
hold only monetary value for
an investor. In contrast, owning
real estate involves emotional
satisfaction. It is also seen as a
Risk-return trade-off: Cash is a

low-risk, low-return asset
class. It is even called a no-risk,
no-return class. You do not
invest the funds anywhere. It
does not bear capital risk or
default risk. Some vehicles in
this asset class offer a very low
rate of return.
Effect of inflation: Although
13
September 2016

status symbol in society. The
amount of funds required for
owning this asset class is the
highest amongst all classes.
has an emotional aspect for

investors. It is a good option for
diversifying your portfolio, as it
is less volatile.
Risk-return trade-off: Owning

a property involves high risk
and high return. Considering
the amount of funds involved,
a decline in the real estate
sector can lead to huge losses.
This could affect your portfolio.
If the market is doing well,
however, you could earn good
returns. But liquidating this
asset is a lengthy and timeconsuming process. Usually, a
house that you buy for living in
is not considered as an
investment.
Risk-return trade-off: The risk

and return are both low. One
can buy gold in different forms.
Historical data shows that gold
has given good returns
specifically during time of
uncertainty. So it is a good
option for diversification but
not necessarily for growth.
Effect of inflation: Gold as an
investment provides
protection during inflation. The
price either remains stable or
increases over a certain period.
Earning profit: Profit is
earnedin the form of a price
difference.
Effect of inflation: If the

property is bought on loan, the
interest rates can fluctuate due
to inflation. This will affect your
total outgo.
Gold vehicles: Gold can be

bought in the form of jewellery,
coins, bars, bonds, exchange
traded funds, and so on.
Earning profit: Profit is earned

by selling the property. You
could also earn regular rent by
leasing the property.
Alternative assets
A newly introduced asset class
that is gaining popularity in
India is alternative assets. Old
currency, stamps, paintings,
and antiques are some of the
instruments that come under
alternative assets. Other forms
of investments, like hedge
funds and venture capital, also
Real estate vehicles: You can

invest in real estate by buying
property (residential or
commercial), land, or shares in
real estate companies.
Gold
Gold is another asset class that
14
September 2016

your investment goals.
belong to this class. Products

in this class are less liquid than
other classes. That is because
these products take time to
gain value. Hence, they are
good long-term investments.
THE BOTTOMLINE
The best portfolio includes
each of these asset classes.
However, the weight given to
each class may vary from
investor to investor. Each of us
should diversify our portfolios
to protect our investments
against various risks.
Asset allocation
There is a reason why there are
so many different assets
available. Each asset has its
host of benefits and risks. This
is why it is important that every
investor diversifies their
portfolio and invests across
multiple assets. This is called
asset allocation distributing
your investments among
various asset classesi.e.
equity, debt, cash, real estate,
and gold. Creating a mix of
different asset classes
determines how your
investment portfolio will
perform. Every asset class has
its own features. Good asset
allocation helps investors get
maximum returns by
minimising the risks
associated with each class.
Understanding Risk v/s

Returns
Investments always come with
their own share of risks losing
the invested money in part or
as a whole. In contrast, the risk
with savings is lower. In this
case, the risk is either that your
savings can be stolen or that it
may not be enough in future
because of inflation.
But what if we told you that the
risk is also related to how much
profits you earn from your
investments? Yes, there is an
inherent connection between
the two.
This is why experts ask you to
do two things before investing
understand how much you
can afford to lose (risk appetite)
and how much return you need
(expected return). A combined
analysis of the risk
involvedversus the returns
After creating a portfolio using

asset allocation, you must
monitor the overall
performance of this portfolio.
Check if you are getting
positive returns and if this
allocation will help you to meet
15
September 2016

expected can help you to make
better investment decisions.
Though the expected returns

are not in any investor's
control, they can be managed
by calculating the risks and
investing accordingly.
Risk-return trade-off
In general, the risk involved in
an investment is directly
proportional to the returns
expected from it. A low-risk
investment is likely to give you
low returns and a high-risk
investment has the potential to
yield high returns. This is
because risk is not always
negative; it simply denotes
volatility in value. So if a risky
asset, say a company's stock,
has the potential to fall 15%,
then it also has the capability to
rise 15%.
Factors affecting risk and return

To find out how much risk you
can take to earn maximum
profits, you must understand
the factors associated with the
trade-off. Let us look at some of
factors to keep in mind:
I. Risk appetite: This is the
level of uncertainty that
investors are willing to
tolerate to earn a profit on
their investment. Investors
must calculate their risk
appetite realistically to
understand how much
change in the value of their
investments they can bear.
To guard your investments

against market uncertainties,
you may prefer low-risk
investments. But these are not
likely to give you lucrative
returns. This is why it is
important to not be scared of
risk. Once you understand that
every investment is exposed to
risk, you can concentrate on
the return potential and not just
the inherent riskiness.
ii. Age: Young investors can

begin conservatively in their
learning phase and take on
more risks in subsequent
years. Taking risks early on
gives them a chance to offset
any losses as they move
ahead.
As per the risk-return trade-off,

an investor always wants to
strike the right balance
between the lowest risks and
the highest expected returns.
i i i . Re s p o n s i b i l i t i e s : Yo u r
responsibilitiesand thus,
expensesincrease with
your age. Middle -aged
investors have added
16
September 2016

responsibilities. Such
investors have lower
capability to take risks. If you
are one such investor, you
should diversify your
portfolio by investing in both
high-risk and low-risk
investment vehicles. As you
approach retirement age,
investors can play it safe by
focusing more on low-risk,
low-return investments.
Singular risk versus portfolio risk

If you invest in a single vehicle,
such as only shares or only real
estate, you face high risk. That
is because non-performance of
the investment may lead to a
complete loss. Hence, you
need to diversify your
investments.
iv.Replace lost funds: When

you are young or have lower
responsibilities, you have
the potential to earn back
any losses you may have
incurred in the market. You
could also bring in other
sources of income to fill up
the gaps formed due to
losses. This translates to
higher risk appetite.
Develop a portfolio by
investing varying amounts in
different vehicles to safeguard
against uncertainties linked to
a specific vehicle. Though the
risk involved in individual
investments may be high, a
well-designed portfolio can
protect you by balancing the
loss from one investment with
higher profit from another.
v. Period of investment: The

duration for which you invest
your funds can determine
t h e r i s k i n v o l v e d . Fo r
example, investing in
company shares is preferred
to be a long-term
investment. This way, you
can get good returns and
also reduce the risk involved.
This is because stocks may
face ups and downs in the
short term, but over the long
Types of risk
As an investor, you are
exposed to various kinds of
risks. These come in handy
when evaluating different
investment vehicles, the risks
associated, and how it affects
your returns. Let us have a look
at the types of risks:
Market risk: This occurs
when the market is not
performing well and that
term it is usually expected to

perform well if the company
remains to be profitable.
17
September 2016

Default risk: This is usually
applicable to fixed-income
instruments like bonds,
which pay a regular interest
and repay your entire
principle investment at the
end of a time period. When
the bond fails to make
payments, it is called to have
'defaulted'.
brings down stock prices

across board.
Legal risk: Modifications in
laws and the legal framework
may affect your investments.
For example, tax-related
laws can affect your
investment income while
some other rule may affect
the profitability of a company
whose shares you hold.
Capital risk: This is the risk

that you lose all or part of the
principle money you
invested in. It is usually
applicable to fixed-income
instruments.
Inflation risk: When the

expected rate of return on
your investment is lower
than the inflation rate, the net
worth of your investment
reduces in comparison with
the rise in prices.
THE BOTTOMLINE
To e x c e l i n t h e a r t o f
investments, all investors must
understand the concepts of
risk and return. The level of risk
appetite varies for every
investor. Thus, it has an impact
on the level of returns as well.
To reach your short-term and
long-term financial goals, an
appropriate balance between
risks and returns is required.
Interest rate risk: A change

in interest rates affects the
value of your investment. For
example, a rise in interest
rates usually leads to fall in
bond prices.
Foreign exchange risk: The
value of investments can
change with fluctuations in
the exchange rate of the
foreign currency against the
domestic currency. This is
because companies earn or
import in foreign currency.
Plus, foreign investors play
in the Indian markets.
How to approach investing

Before you start investing
already, hold yourself: The first
step of any financial plan is
creating goals. Have you
created yours yet?
Imagine driving a car without
18
September 2016

having a clear route map to
reach your destination. You
could drive forever and still not
reach anywhere. Investing
without a goal-based approach
is just like thatactually, it is
worse. You could end up facing
financial distress, despite
working hard to save money
and invest it.
market volatility is the greatest

risk you face while pursuing
your goals. The extent to which
you are willing to take this risk
to earn higher returns is your
'risk tolerance'. The traditional
approach advises that
managing your risk tolerance
and return expectations should
be the focus of investing.
However, the overemphasis of
the traditional approach on
managing risks and returns can
make you lose sight of your
goals. You may be unable to
track your progress along each
specific goal and, in the end,
not achieve any of them.
Financial goals
A financial goal is a future
expense for which you build a
corpus. It could be
anythingyour retirement,
your child's wedding, buying a
new home, or even a dream
foreign tour! You would
normally have multiple
financial goals at any given
point. You should have a
separate investment strategy
to achieve each of them. An
international study suggests
that you have a 50% greater
probability of reaching your
goals using a goal-based
approach than the traditional
approach.
Goal-based investing approach

This approach recognises that
investors have different and
unique investment goals. You
must construct a separate
portfolio to achieve each of
them. Achieving your financial
goals should be the main aim
of investment. Mitigating
market risks, though
important, should be a
secondary goal. The goalbased approach gives
precedence to your 'risk
capacity' over your 'risk
tolerance'. In other words, it
focuses on how much risk you
should take, given the
Traditional approach
This approach suggests that all
investors have similar goals. It
also believes that you should
form a single portfolio to
achieve your goals. This is
because it assumes that
19
September 2016

importance and proximity of
your goal. How 'willing' you are
to take more risk to earn an
extra buck is not important
under this approach. Goal
based investing is a more
precise and detailed way of
investing. It focuses on
matching your financial
resources with your financial
goals and liabilities.
of diverting money towards

discretionary items and reach
your goal faster.
Better risk management
When your goal is far away,
you can afford to invest in risky
assets to generate high
returns. If something goes
wrong, you always have time
to make up. As your goal
comes close, you should resist
risky investments and hold on
to what you have earned.
When you follow the goalbased approach, you have a
clear goal and a timeline. You
know exactly how much risk
you can take at a given point.
Without a goal, you may be
lured into making risky bets to
earn higher returns. This may
result in big losses.
Greater investing discipline

Maintaining investment
discipline is the most difficult
part. We are always tempted to
spend money on less
important things. This does not
leave us with enough money to
invest for our long-term goals.
The goal-based approach
provides a direction to our
investments. It tells us exactly
what we are trying to achieve
and how much we should
invest to do it. A clear goal
prevents us from wasting
money and helps maintain our
investment discipline.
Tracking your progress

A portfolio review is a critical
part of investing. Following a
goal-based approach tells you
how far your goal is and how
much progress you have
made. If you are behind
schedule, you can readjust
your strategy to ensure that
you meet the goal. If you are
doing better than expected,
you can reduce your portfolio
risk and glide towards your
goal.
Source of motivation
With each increment to your
portfolio, you see yourself
getting closer to your goal.
This is a source of tremendous
motivation that sharpens your
commitment towards the goal.
You can resist the temptation
20
September 2016

A good starting point
Think about it: When you plan
a travel, do you randomly book
a flight ticket you like? No, you
first select the destination.
This, then, helps you make
other decisions how many
days, budget, which time of the
year, what to wear, etc.
Similarly, the goal becomes
your starting point. You cannot
just invest money in anything

that chooses your fancy.
Rather, when you have a goal
in mind, say accumulating a
retirement corpus of Rs 5
crore, you can then make a
slew of decisions how much
should you invest per month,
where to invest, what is the
return you expect, how much
risk can you take, etc. .
Here's how you can use each assets:
INFOGRAPHIC
Goal setting - Different investments for different needs
Asset class
Equity
Utility
High risk high -return investments are best suited for long-term goals.
You have several options to select from based on your goal.

Should constitute a high percentage of your portfolio at all times, but
selection of funds can be periodically realigned to your goal.
Require disciplined investment till retirement and give regular
pension or lump sum- on retirement.
Retirement plans
Lump-sum plans are better if you are confident that you can invest
the lump sum in a way that will give you higher regular income than
the fixed pension plan.
These are safe investments, but offer low returns.
Best suited for short-term goals, or when long-term goals are close
by, provided you have earned a high proportion of your target
Bonds
amount.
Also well-suited to immediate regular income goals, as they pay
regular dividends.
Combine the benefits of equity and insurance, but offer mediocre
returns and low insurance cover, despite very high premium.
ULIPs
It is better to build a separate equity portfolio for long term goals and
buy term insurance.
Mutual funds
THE BOTTOMLINE
An investment without a goal is
like an angry bull without
direction it can head off
anywhere, leaving behind
destruction in its wake. It may
seem like a tedious job to sit

down and write down all your
priorities and goals, but that's
how you can ensure you meet
your aspirations. It's easier
than it seems.
21
September 2016
Tte--tte
Drawing up a proper asset allocation or
financial plan is the starting point
In late September, we had an "Ask the Fund Manager" on iCommunity a section on
our website icicidirect.com where our customers interact with each other about
markets and other personal finance questions.
Ask the Fund Manager is a forum where our customers can ask prominent fund
managers questions they may have regarding investments in mutual fund. In one
such forum we invited Mr Sunil Singhania, CIO, Equity Investments, Reliance
Mutual Fund.
Where he talks about some basics on investing in Mutual Funds. Excerpts:
Hence drawing up a proper

asset allocation or financial
plan is the starting point.
First time equity investors can
consider investing in
Diversified Equity funds and
participate systematically over
a long period of time.
Conservative or risk averse
investors with a medium to
long term horizon can choose
accrual focused debt funds,
which can potentially provide
superior tax adjusted returns
as compared to fixed income
instruments
Mr Sunil Singhania, CIO,

Equity Investments,
Reliance Mutual Fund.
Q: What would be your advice for

beginners in the field of Mutual
Funds?
A: Appropriate asset allocation
based on one's investment
goals, risk appetite, time
horizon along with disciplined
investing and regular rebalancing are the key to
successful wealth creation.
Q: As an investor, what are the

aspects which we should look for
before investing in a Mutual Fund?
A: Selection of a mutual fund
should involve analysis of key
parameters like fund house
pedigree, track record of fund
management team, fund
performance across different
market cycles, current
22
September 2016
Tte--tte
portfolio construct or
positioning etc. Investors
should also consider risk
adjusted performance for a
holistic comparison.
from as low as one day to goal

based solutions like
Retirement. Investors can
accordingly construct a
suitable portfolio of funds in
line with their time horizon &
risk profile, best suited to
achieve their financial goals.
Since the fund selection

involves lot of analysis both
historical & forward looking,
investor can benefit from
availing services of financial
advisors, who can assist them
in identifying appropriate
funds to invest in.
Q: What are the risks associated

with investing in Mutual Funds?
A: Mutual Funds are market
linked offerings hence the
returns are subject to market
risks or fluctuations. Some of
the common risks involved
are:
Q : There are various sub categories of Mutual Funds which

are present in the market. What is
the ideal strategy to adopt for
building a Mutual Fund Portfolio?
A : The key to portfolio
construction is to determine
one's investment goals, risk
appetite, time horizon and
return expectations. Based on
the same an investor in
consultation with his or her
financial advisor can construct
a portfolio of funds across
asset categories, most
appropriate to achieve the
targeted investment
objectives.
Marked to Market or Price risks:

Decline in the prices of the
underlying investments
(Equity/ Debt) can lead to
lower returns.
Credit Risk: In case of debt
oriented funds the price of
underlying investments can
be impacted due to a Credit
downgrade or in case of a
default by the borrower
Liquidity Risk: Liquidity risk
refers to a situation where
the underlying security
whose cannot be transacted
due to lack of volumes
leading to a decline in
security value.
Mutual funds provide

investment solutions across
asset categories and
investment horizons starting
However, while these risks

23
September 2016
Tte--tte
cannot be fully eliminated the
same can be mitigated to a
large extent by having a proper
asset allocation plan and
investing in appropriate assets
based on one's risk appetite
and investment horizon.
towards marketing and

operations. The Net Asset
Value (NAV) represents current
value of a fund post expenses.
While it is logical that a fund
with lower expense ratio is
likely to outperform a peer
fund with higher expense, it is
also possible especially in case
of certain category of funds
like equity, that reverse is true
based on the underlying
portfolio or stock selection.
Q: What are the parameters set by

AMCs for selection of specific
companies for various mutual
funds?
A: The basic parameter for
selection of a Company
(Equity or Fixed Income) is the
Corporate Governance
Standards and Balance Sheet
quality. Extensive analysis is
carried out involving financial
and qualitative data, sector
prospects, historical
performance trends, track
record etc.
Usually the expense ratio

within the same category of
funds do not have huge
variation and hence the
performance differential due
to charges or expenses is
limited.
Q: I have been investing in a couple
of Mutual Funds and the returns
have not been satisfactory.
According to you, how often should
one evaluate the Mutual Funds
portfolio?
A: At the outset please
evaluate if the funds match
your investment goals, risk
appetite, time horizon and
return expectations. Also
check if there is any change in
the fund investment strategy
or the fund management team
for a proper insight.
Thus the attempt is to identify

businesses where both the
performance (EPS) and the
perception (P/E) can improve
over a period of time
Q: What is the relevance of
Expense Ratio? Is there any
connection between High
Performing Mutual Fund / Low
Performing Funds and expense
ratio?
A: Mutual Funds charge
expenses to meet the
maintenance costs involved
As a thumb rule you should

24
September 2016
Tte--tte
regularly track your funds on a
quarterly, half yearly or annual
basis and consider
appropriate re-balancing at an
asset allocation level. From a
fund perspective if the
portfolio construct is
appropriate going forward and
the fund has demonstrated
strong record, then the
investments can be held on
despite near term
underperformance.
disciplined investing can assist

investors participate in
markets at different points of
time and smoothen out the
volatilities over a period of
time.
Q: Are gains from Mutual Funds like
monthly income plans - Tax-free?
And what about equity-based
Mutual Fundsare they tax-free if
redeemed after one year?
A: Equity oriented funds
redeemed after 12 months
from the date of purchase will
not be subject to Capital Gains
tax, if applicable.
Q: Suppose if I start a SIP for three

years and have X amount as my
investment target. So, after three
years, if my investment target isn't
met due to market volatility. What
should I do? Should I continue
investing or should I rejig my SIP
structure of different Mutual
Funds?
A: Ideally SIPs should be
considered from investment
horizon of at least 5 10 years
or even more as they help in
creating long term wealth. If
the current underperformance
is on account of market
volatility one should continue
with investment as long as the
same is line with risk appetite
of the investor. Further regular
Debt oriented products like

Monthly Income Plans are
subject to the following capital
gains tax structure:
If the investments are
redeemed before 36 months
from the date of purchase
the gains, if any, will be
subject to Short Term
Capital Gains tax rates
If the investments are
redeemed after 36 months
from the date of purchase
the gains, if any, will be
subject to Long Term Capital
Gains tax rates.
The views expressed in the article are personal views of the author and do not necessarily
represent the views of ICICI Securities.
25
September 2016
ASK OUR PLANNER
Rental income on property vs interest income on FD

Q. I have a Flat at my home town. I
am planning to sell the flat as the
rent is very less. If I sell the flat and
put the entire amount into a Bank
Fixed Deposit, the monthly interest
which I would get will be more than
the rent I receive now. Is it an
advisable option to look at?
Aditya Prakash
A. Rental yield from a
residential property will be
around 2-3% p.a. of the market
value of the property only in
most of the locations. Hence, it
might not look attractive when
you compare the same with a
Bank Fixed Deposit, which may
yield you around 8% p.a.
However, you need to note that
the value of your property will
also appreciate unlike a Bank
FD. If you calculate the total
return i.e. appreciation and
rental income, then the yield
might be more than your Bank
FD.
taxed only on the balance 70%

amount; however the entire
interest on your Bank FD will be
added to your income and
taxed as per your income slab.
Also, if you sell your property,
the capital gains arising out of
such sale will be subject to tax
in your hands, if you do not reinvest the same into a
residential property or into
capital gain bonds. Hence, if
you are looking to invest the
sale proceeds into a Bank FD,
you would be able to invest
only a lesser amount, after
deducting the tax to be paid on
the capital gains.
Q. My age is 53. My retirement age
is 65. At present, my take home
salary is Rs.38,000. I want to take
home loan for 10 years. How much
loan can I get and what would be
EMI ? Is there any tool which could
help me to calculate the EMI?
Kishore Kumar
A. Let's assume your gross
monthly income to be
Rs.40,000 and you do not have
any other EMIs currently. To
One more point to note is while

computing tax on your rental
income, 30% of the income
can be availed as a standard
deduction and you will be
26
September 2016
ASK OUR PLANNER

calculate the eligible home
loan amount, housing finance
companies generally use a
Fixed Obligation to Income
Ratio, which is around 45 to
55% of your gross monthly
income. This is the maximum
amount which you would be
able to pay as EMI from your
income.
the return generated by your

investment gets re-invested
into the same instrument,
unlike a simple interest, where
the return generated is paid out
on a periodical basis to you.
For example, if you invest
Rs.100 in an instrument which
offers a compound interest of
10% p.a., compounding
annually, then at the end of 1
year, the interest earned from
such investment will be Rs.10
and the same will get reinvested along with the
principal next year. Hence, for
second year, the interest will be
10% on 110 i.e. Rs.11 and so
on.
Assuming the ratio to be 50%,

then the maximum EMI which
you could pay would be
Rs.20,000. Working
backwards, at an interest rate
of 9.50% p.a., you would be
eligible for a home loan of
approximately Rs.15.45 lakh
for a repayment term of 10
years. There are a lot of EMI
calculators available online to
calculate the EMI for your loan.
You can also calculate through
Microsoft Excel using PMT
formula.
Since the return on further

years gets calculated on the
sum of principal and the earlier
generated return, the longer
the tenure of your investment,
the final maturity value will be
substantial. To understand this
through an example, let's
assume person A invests a
lumpsum of Rs.1 lakh into a MF
(Growth option) for 15 years
and person B invests the same
amount into the same fund for
30 years. Assuming the fund
Q. I often come across the term

Power of Compounding in some
articles / advertisements of mutual
funds. What does this mean? Can
you explain with the help of an
example?
Raj Modi
A. Compounding means that
27
September 2016
ASK OUR PLANNER

provides a compounded
return of 12% p.a., person A
will get Rs.5.47 lakh after 15
years, whereas person B will
get Rs.29.96 lakh. This is the
power of compounding in
longer term; to experience the
compounding magic on your
investments, you need to start
investing early and stay
invested for a long term.
and accordingly, will not be

chargeable to tax.
Q. I read through the Money
Manager August '16 Issue with
great interest. The general
direction and investment advice is
to continue investing in India
equities for the next 2-3 years. You
mention that one should
accumulate shares on dips. Can
you elaborate what is considered a
dip? Can we assign some sort of
percentage decline in value either
to the stock price or the index that
can be reasonably considered to be
a dip?
Q. What are the tax implications if

as a mother I have to gift some
money to my children?
Elizabeth Joseph
A. As per the Income Tax Act,
any sum of money received by
an individual without
consideration from persons, if
it exceeds Rs.50,000 during a
year, is chargeable tax, subject
to certain exclusions. The
exclusions include money
received from relatives
(including spouse, siblings,
parents and children), money
received on the occasion of the
marriage of the recipient,
money received under a will or
inheritance, etc.
I will also appreciate if you can

advise whether an individual
investor can invest directly in GOI
G-Sec's, if so is this available
through the ICICIdirect platform.
Ravi Kashyap
A. A 'dip' referred to is
subjective in nature and its
quantum depends upon
individual investors. The
thought process behind
writing the word 'dip' is to
convey the message that
whenever market witnesses
some correction, investors
should utilize it to buy rather
than expecting a trend reversal
Hence, if you gift some money

to your children, this would
come under the exclusions
28
September 2016
ASK OUR PLANNER

or deep correction. For
instance, for an individual who
is a long-term equity investor,
even a 100-200 point
correction in Nifty could be a
'dip' which should be utilized to
invest further. For another
investor who is risk-averse and
invests mainly into a mix of
debt and equity instruments,
even a higher correction could
be irrelevant as his risk
appetite would be lower and
he would remain invested in
fixed income unless equity
market witnesses meaningful
correction.
Secs is only available to

institutional players like banks,
primary dealers, insurance
companies, mutual funds,
foreign portfolio investors and
high net worth individuals.
However, the Reserve Bank of
India (RBI) has recently come
up with guidelines to further
ease the framework for
individual investors to invest
directly. There are a few banks
that currently provide this
facility. However, it may take
some time for the process to
become smoother. ICICIdirect
currently does not provide the
option to invest directly in
government securities for
retail investors.
Regarding your second query

on G - Secs (Government
securities) - Currently, the
option to invest directly in G-
Do you also have similar queries to ask our experts? Write to

us at: moneymanager@icicisecurities.com.
29
September 2016
MUTUAL FUND ANALYSIS
Investing In Mid-Cap Equity Funds

investments in equity and
equity related securities of
small and mid cap companies
HDFC Mid-Cap Opportunities Fund
Fund Objective:
The aim of the fund is to
generate long-term capital
appreciation from a portfolio
that is substantially constituted
of equity and equity related
securities of small and mid-cap
companies.
Fund Manager: Chirag Sitalvad

Mr. Chirag is a B.Sc. and MBA
from University of North
Carolina. He has been working
with HDFC AMC since 2007.
Prior to joining HDFC AMC, he
has worked with New Vernon
Advisory
Key Information:
NAV as on September 09, 2016 (`)
45.8
Inception Date
June 25, 2007
Fund Manager
Chirag Setalvad
Minimum Investment (`)

Lumpsum
SIP
5000
500
Expense Ratio (%)
2.14
Exit Load
Benchmark
Performance:
Fund has outperformed the
benchmark in 6 months, 1 year,
3 year and 5 year returns. It has
beaten its benchmark over
three periods by double-digit
margins. It delivered returns of
24.9% for 1 year period as
against the benchmark return
of 22.9%. For a period of 5
years, its CAGR return has
been 24% as against
benchmark return of 16%. In
2008, 2011 and 2013, this was a
rare mid-cap fund to contain
losses to levels far lower than
peers as and the benchmark.
1% on or before
1Y, NIL after1Y
Nifty Free Float
Midcap 100
Last declared Quarterly

AAUM(` cr)
12997
Product Label:
This product is suitable for

investors who are seeking:
long-term capital growth
30
September 2016

Calendar Year-wise Performance
2015
2014
2013
NAV as on Dec 31 (`)
38.2
36.1
20.4
Return (%)
5.8
76.6
9.6
Benchmark (%)
6.5
55.9
-5.1
Net Assets (| Cr)
10915
9161
3049
2012
18.6
39.6
39.2
2756
2011
13.4
-18.3
-31.0
1593
6 Month
3 Year
23.9
16
40
1 Year
Fund
30.7
24.9
22.9
32.7
50
40
30
20
10
0
26.9
Return%
Performance vs. Benchmark
5 Year
Benchmark
Last Three Years Performance

30-Jun-15 30-Jun-14
Fund Name
30-Jun-16 30-Jun-15
8.60
26.72
HDFC Mid-Cap Opportunities Fund
6.20
17.24
Benchmark
Portfolio:
The fund usually parks 75% in
mid cap companies with a
flexibility to invest 25% in large
cap funds. Its philosophy is to
invest in businesses with good
fundamentals and that are run
by sensible management. The
style is growth at a reasonable
price, with the fund filtering
companies that are growing at
about 15-20% with good cashflow generation and an
acceptable return on equity.
average allocation to a stock is

only 5 per cent, resulting in a
portfolio of 77 stocks. The fund
has outperformed its category
during the crash of 2008 and
the market slowdown in 2011.
It has lower exposures to large
cap and small cap companies
than its peers. The fund has
conservative style of investing
hich makes it suitable for risk
averse investors. The good
performance has seen its
corpus exceed |10,000 crore in
2015. This is a good choice for
higher returns that mid caps
can provide, without undue
shocks in choppy markets. The
Our View:
HDFC Mid-Cap Opportunities
fund provides a heavily
diversified portfolio. The
30-Jun-13
30-Jun-14
70.10
51.13
31
September 2016

low expense ratio, stable
management and ability to
curtail losses in a tough market

make it a good investment.
Top 10 Holdings
Hindustan Petroleum Corporation Ltd.
Voltas Ltd.
Cholamandalam Investment & Finance Company Ltd.
Tube Investments Of India Ltd.
Yes Bank Ltd.
Axis Bank Ltd.
Aurobindo Pharma Ltd.
Bajaj Finance Ltd.
Sundram Fasteners Ltd.
Divis Laboratories Ltd.
Top 10 Sectors
Bank - Private
Pharmaceuticals & Drugs
Bank - Public
Finance - NBFC
Air Conditioners
Printing And Publishing
IT - Software
Engineering - Industrial Equipments
Pesticides & Agrochemicals
Tyres & Allied
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
%
3.1
2.8
2.6
2.5
2.4
2.2
2.2
2.2
2.2
2.2
%
8.9
8.4
6.3
4.8
4.7
4.3
4.1
4.0
3.8
3.2
Risk Parameters
Standard Deviation (%)
Beta
Sharpe ratio
R Squared
Alpha (%)
12.82
0.80
0.09
0.87
2.30
Market Capitalisation (%)
Large
Mid
Small
32.3
46.2
17.4
558.7
470.7
SIP Performance (Value if invested ` 5000 per month (in'000))
600
200
100
55
63.2
62
300
295
400
175
247.6
232.4
500
0
1Yr
3Yrs
5Yrs
10Yrs
Total Investment Fund Value
Benchmark Value
32
September 2016

Whats In
Atul Ltd.
0.8
0
RBL Bank Ltd.
Portfolio Attributes
Total Stocks
Top 10 Holdings (%)
Fund P/E Ratio
Benchmark P/E Ratio
Fund P/BV Ratio
77.0
24.4
25.8
-4.6
Asset Allocation
Equity
Debt
Cash
95.9
1.3
2.8
Dividend History
Date
Dividend (%)
Mar-28-2016
15
Mar-25-2015
20
Feb-28-2014
17.5
Feb-28-2013
11.5
Feb-23-2012
15
Performance of all the schemes managed by the fund manager

Fund Name
HDFC Small and Mid Cap Fund-Reg(G)
NIFTY SMALL 100
HDFC Mid-Cap Opportunities Fund(G)
Nifty Free Float Midcap 100
HDFC Multiple Yield Fund 2005(G)
Crisil MIP Blended Index
HDFC Long Term Adv Fund(G)
S&P BSE SENSEX
30 -Jun-15
30 -Jun-16
30 -Jun-14
30 -Jun-15
30 -Jun-13
30 -Jun-14
10.10
20.32
9.195240376
-1.21
40.58
85.40
8.60
26.72
70.10
6.201550388
17.24
51.13
20.59
7.81
7.59
8.626207588
11.05
8.24
4.53
11.08
48.59
-2.811687052
9.31
31.03
Data as on September 09, 2016 ;Portfolio details as on Aug -2016

Source: ACE MF, ICICIdirect Research
33
September 2016

PCDs and FCDs from selected
industries with high growth
potential to provide investors
maximum growth opportunities
SBI Magnum Global Fund
Fund Objective:
To provide the investors
maximum growth opportunity
through well researched
investments in Indian equities,
PCDs and FCDs from selected
industries with high growth
potential and Bonds.
Fund Managers: R Srinivasan

Mr. Srinivasan is M.com and
MFM. He has been working
with SBI AMC since 2009. Prior
to joining SBI he has worked
with Principal PNB AMC,
Motilal oswal, etc
Key Information:
53.7
Inception Date
September 22, 1994
Fund Manager
R. Srinivasan

Lumpsum
SIP
Performance:
The fund has been a star
performer in the mid cap
category. The three- and fiveyear show of the fund remains
very good with a 3-5
percentage point margin of out
performance over and above
the benchmark. The fund has
recently underperformed as
many quality stocks did not
rallied as much as many of the
sub optimal quality stocks in
the midcap index. The fund has
delivered 20.4% CAGR returns
over five years vs benchmark
return of 15.7%.
5000
1000
Expense Ratio (%)
2.05
Exit Load
1% on or before
12M, Nil after 12M
Benchmark
S&P BSE Mid-Cap
Last declared Quarterly

AAUM (`cr)
2959
Product Label:

investors who are seeking*:
long-term growth opportunities
investments in Indian equities,

Return (%)
Benchmark (%)
Net Assets (` Cr)
2015
49.8
7.9
7.4
2474
2014
50.9
66.6
54.7
1738
34
2013
35.1
9.7
-5.7
910
2012
32.0
36.0
38.5
959
2011
23.5
-14.2
-34.2
899
September 2016
20.4
33.6
32.4
26.9
15.7
20
10.4
30
17.8
Return%
40
29.9
10
0
6 Month
1 Year
3 Year
Fund
Benchmark
5 Year

30-Jun-15 30-Jun-14 30-Jun-13
Fund Name
30-Jun-16 30-Jun-15 30-Jun-14
-6.43
35.70
32.69
SBI Magnum Global Fund - 1994
9.71
13.87
57.25
Benchmark
Portfolio:
This is a stringently mid-cap
focused fund. Three-fourths of
the portfolio is invested in midcap stocks, while peers retain a
lower than 50 per cent
allocation. The fund is
underweight both on giant and
large caps relative to the
category. The stock selection is
bottom-up and this fund's
portfolio features several
unconventional picks which
have long-term potential, from
the mid-cap space. The market
is screened for stocks which
have competitive advantage,
return on capital of 18-20 per
cent and growth of 18-20 per
cent. As can be expected, this
leads to a fairly growth-
oriented portfolio and a high

portfolio P/E.
Our View:
Consistency in the mandate
and the strategy has been
evident from 2009-10 and this
has paid off by way of a good
show across bear markets as
well. In the last one year, the
fund has managed marginal
gains, while the category has
slumped into the red. The fund
manager picks unconventional
stocks with long term potential
and this strategy has paid off
well in the past. The fund has
been a star performer and fund
manager track record makes
the fund an attractive
investment in mid cap
category.
35
September 2016

Top 10 Holdings
Divis Laboratories Ltd.
MRF Ltd.
Procter & Gamble Hygiene & Health Care Ltd.
Sundaram Finance Ltd.
CBLO
Dr. Lal Pathlabs Ltd.
Page Industries Ltd.
Solar Industries (India) Ltd.
Whirlpool Of India Ltd.
United Breweries Ltd.
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Cash & Cash Equivalents
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Top 10 Sectors
Chemicals
Pharmaceuticals & Drugs
Finance - NBFC
Household & Personal Products
Bearings
Textile
Finance - Housing
Tyres & Allied
Hospital & Healthcare Services
Consumer Durables - Domestic Appliances
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
%
4.5
4.3
4.3
3.9
3.7
3.7
3.5
3.5
3.4
3.3
%
7.7
7.5
7.0
5.8
5.5
5.4
5.2
5.1
3.7
3.4
Risk Parameters
Beta
Sharpe ratio
R Squared
Alpha (%)
9.58
0.62
0.04
0.76
1.69
Large
Mid
Small
15.1
62.1
19.6
1511.9
1147.3
2000
595
295
506.6
484.8
500
55
58.7
63.5
1000
175
227.4
240.1
1500
0
1Yr
Total Investment
3Yrs
5Yrs
Fund Value
36
10Yrs
Benchmark Value
September 2016

Whats In
Thermax Ltd.
2.2
0.8
Balkrishna Industries Ltd.
Whats out
%
2.6
Pidilite Industries Ltd.
Total Stocks
Top 10 Holdings (%)
Fund P/E Ratio
Benchmark P/E Ratio
Fund P/BV Ratio
39.0
37.9
37.9
-9.5
Asset Allocation
Equity
Debt
Cash
96.7
0.0
3.3
Dividend History
Date
Dividend (%)
Oct-30-2015
Jun-06-2014
May-31-2011
Mar-12-2010
Mar-26-2007
Jul-01-2005
51
57
50
50
50
42.5

Fund Name
SBI Small & Midcap Fund-Reg(G)
S&P BSE Small-Cap
SBI Emerging Businesses Fund-Reg(G)
S&P BSE 500
SBI Magnum Balanced Fund-Reg(D)
30 -Jun-15
30 -Jun-16
11.53
30 -Jun-14
30 -Jun-15
53.22
30 -Jun-13
30 -Jun-14
62.84
6.55482671
8.55
80.79
8.90
22.46
37.46
1.154855354
11.36
36.67
5.59
23.63
37.28
CRISIL Balanced Fund - Aggressive Index 3.118784442
10.58
20.99
SBI Magnum Equity Fund-Reg(D)
20.87
32.56
NIFTY 50
SBI Contra Fund-Reg(D)
S&P BSE 100
SBI Magnum Global Fund 94-Reg(D)
S&P BSE Mid-Cap
3.56
-0.964928004
9.95
30.28
3.54
19.83
31.04
-0.403232952
9.32
33.44
3.12
35.70
52.56
9.711900479
13.87
57.25

37
September 2016

investors who are seeking*:
long-term capital appreciation
Franklin India Smaller

Companies Fund
Fund Objective:
An open end diversified equity
fund that seeks to provide long
term capital appreciation by
investing in mid and small cap
companies.
*primarily a large cap fund with

some allocation to small/mid cap
stocks
Fund Manager: R Janakiraman

Mr. Janakiraman is B.E. and
PGDM. He has been with
Franklin Templeton fund since
2008 and has been managing
various funds since then.
Key Information:
47.8
Inception Date
January 13, 2006
Fund Manager
R. Janakiraman

Lumpsum
SIP
Expense Ratio (%)
Exit Load
Benchmark
Performance:
Launched in the frothy markets
of 2006, the fund delivered
erratic returns until 2008, but
has pulled up its socks
thereafter. The fund took a bad
knock in the 2008 meltdown
but has weathered the last two
bear phases (2011 and 2013)
extremely well, doing far better
than the benchmark and the
peers. It has outperformed
benchmark across time period
by giving CAGR return of
28.9% (benchmark : 16%) and
45.2% (benchmark: 30.7%) for
5 year and 3 year period
respectively.
5000
500
2.43
1% on or before 1Y
Nifty Free Float
Midcap 100
Last declared Quarterly AAUM(` cr)
3734
Product Label:

Return (%)
Benchmark (%)
Net Assets (` Cr)
2015
40.2
9.6
6.5
2740
2014
36.7
89.9
55.9
1774
38
2013
19.3
13.2
-5.1
369
2012
17.1
51.7
39.2
344
2011
11.3
-25.9
-31.0
307
September 2016
6 Month
1 Year
Fund
16
28.9
30.7
45.2
22.9
27.1
26.9
50
40
30
20
10
0
30.9
Return%
3 Year
Benchmark
5 Year

30-Jun-15 30-Jun-14 30-Jun-13
30-Jun-16 30-Jun-15 30-Jun-14
14.74
34.89
73.66
Franklin India Smaller Companies Fund
6.20
17.24
51.13
Benchmark
Fund Name
Portfolio:
The fund invests 83% of its
portfolio in small and mid cap
stocks. This fund invests in
stocks with a market cap below
that of the 100th stock in the
CNX 500 index. Like all Franklin
equity schemes, the style is
bottom-up and hunts for
growth at a reasonable price.
The manager looks for 'quality
compounders' - companies
which can compound their
earnings at a high rate, with
good return on capital, low
capital intensity and capable
management. Businesses that
do not have the ability to
generate free cash flows over a
business cycle are avoided. So
are those with poor return on
capital and limited entry
barriers.
Our View:
The fund has outperformed its
benchmark (CNX Midcap
Index) and its category across
various time frames. An ability
to navigate volatile markets
well and keep up a quality stock
bias has helped this fund
ascend from a four-star to a
five-star rating in the last
couple of years. Fund's recent
performance has been
outstanding and has been
noted for consistent
management. The fund
contains good quality stocks
with positive outlook in the
current economic scenario.
The fund manager has churned
the portfolio well and has
39
September 2016

added quality stocks at the
right time to match the current
economic trend. The fund,
therefore, is best for those

willing to take on a little risk for
higher returns.
Top 10 Holdings
Asset Type
Call Money
Finolex Cables Ltd.
Equitas Holdings Ltd.
Yes Bank Ltd.
eClerx Services Ltd.
Repco Home Finance Ltd.
Voltas Ltd.
Deepak Nitrite Ltd.
HDFC Bank Ltd.
Atul Ltd.
Cash & Cash Equivalents

Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Top 10 Sectors
Bank - Private
Finance - NBFC
Cable
Bearings
Cement & Construction Materials
Chemicals
Air Conditioners
Printing And Publishing
IT - Software
Engineering - Industrial Equipments
%
9.7
4.6
4.2
3.1
2.5
2.4
2.3
2.2
2.1
2.1
%
12.2
5.2
4.6
4.4
4.4
4.2
4.1
3.2
3.0
3.0
Risk Parameters
Beta
Sharpe ratio
R Squared
Alpha (%)
12.42
0.77
0.10
0.82
5.76

Large
Mid
Small
10.8
42.0
35.5
1891.2
1211.2

2000
595
295
632.9
470.7
500
55
62.8
62
1000
175
259.8
232.4
1500
0
1Yr
Total Investment
3Yrs
5Yrs
10Yrs
Fund Value
Benchmark Value
40
September 2016

Whats In
FDC Ltd.
0.2
Whats out
%
0.7
Century Plyboards (India) Ltd.
Total Stocks
71.0
Top 10 Holdings (%)

Fund P/E Ratio
Benchmark P/E Ratio
Fund P/BV Ratio
35.2
26.0
-4.4
Asset Allocation
Equity
Debt
Cash
88.3
0.0
11.7
Dividend History
Date
Dividend (%)
Feb-22-2016
20
Feb-23-2015
20
Feb-17-2014
15
Feb-25-2013
25
Aug-09-2007

Fund Name
Franklin India Smaller Cos Fund(G)
NIFTY 50
Franklin India Prima Fund(G)
NIFTY 50
Franklin India Flexi Cap Fund(G)
NIFTY 50
Franklin India Opportunities Fund(G)
S&P BSE 200
30 -Jun-15
30 -Jun-16
30 -Jun-14
30 -Jun-15
30 -Jun-13
30 -Jun-14
14.74
34.89
73.66
-0.964928004
9.95
30.28
10.45
33.23
59.01
-0.964928004
9.95
30.28
2.38
26.10
49.90
-0.964928004
9.95
30.28
2.00
31.59
39.95
0.408342882
12.01
34.45

41
September 2016
MUTUAL FUND TOP PICKS

Mutual Fund Top Picks
Based on our quarterly rankings, we have updated our mutual fund (MF)
top picks recently
Equity
Debt
Largecaps
Liquid Funds
Birla Sunlife Frontline equity Fund

ICICI Pru Focussed Bluechip Equity Fund
SBI Bluechip Fund
HDFC Cash Mgmnt Saving Plan

ICIC Pru Liquid Plan
Reliance Liquid Treasury Plan
Ultra Short Term

Midcaps
Birla Sunlife Savings Fund

Reliance Medium Term Fund
ICICI Pru Flexible Income Plan
HDFC Midcap Opportunities Fund

Franklin India Smaller Companies Fund
SBI Magnum Global Fund
Short Term
Birla Sunlife Short Term Fund
HDFC Short Term Opportunities Fund
ICICI Pru Short Term Plan
Diversified
Credit Opportunities Fund
Franklin India Prima Plus

Reliance Equity Opportunities
ICICI Prudential Value Discovery Fund
Birla Sunlife Short Term Opportunities Plan

Reliance Regular Savings Fund
ICICI Prudential Regular Savings
ELSS
Income Funds
Axis Long Term Equity

ICICI Prudential Tax Plan
Franklin India Tax shield
ICICI PrudenIncome Fund

Birla Sun Life Income Plus - Regular Plan
UTI Bond Fund
Gilts Funds
ICICI Pru Gilt Inv. PF Plan
Birla Sunlife Constant Maturity 10 year
gilt plan
MIP Aggressive
Birla Sunlife Savings 5
ICICI Prudential MIP 25
DSP Blackrock MIP
42
September 2016
EQUITY MODEL PORTFOLIO

Our indicative large cap equity model portfolio has continued to
deliver an impressive return (inclusive of dividends) of 108.5%
since its inception (June 21, 2011) vis--vis the index return of
62% during the same period, an outperformance of 47%. This
validates our thesis of selecting companies with sound business
fundamentals that form the core theme of our portfolio. Our
midcap portfolio of 16 stocks outperformed the benchmark by 2x
(since June 2011), posting returns of 153.2%. Our consistent
outperformance demonstrates our superior stock picking ability
as markets in the first half of CY17 aligned to our view of
favourable risk reward, good franchisee vs. reward-at-any-risk
businesses. Some key performers of our portfolio are Bajaj
Finance, Lupin, Axis Bank and HDFC Bank in the large cap
portfolio while Natco Pharma, Bajaj Finserv and UltraTech have
delivered stupendous returns in the midcap portfolio.
We continue to advocate the SIP mode of investment as the
preferred mode of deployment given the volatile market
conditions. We highlight that the SIP return of our portfolio has
consistently outperformed the indices. This affirms our belief in
the staggered and systematic approach of investment amid
market volatility.
The Q1FY17 performance of Sensex companies ex-banks &
commodity space (oil & gas, metals & mining) was robust on the
topline front but largely flat on the profitability front. Total sales
for Sensex companies rose 10 6% YoY marking Q1FY17 as
thesecond consecutive quarter of double digit topline growth,
depicted a progressive up-tick in demand prospects.
Furthermore, India's manufacturing activity grew at the fastest
clip in 13 months in August with a PMI of 52.6, representing an
eighth straight month of expansion. Auto volumes for
September continue to positively surprise indicating strong
support from good monsoons and the Seventh Pay Commission.
Given the last revamp in the portfolio we have made minimal
changes in portfolio, the current edition, to capture the new
opportunities available in the market. Following the same, we
43
September 2016

have reshuffled the weights of some companies. Among large
caps, we have increased the weight of Bajaj Finance by 2%. We
have also increased the weight of Maruti, UltraTech and Marico
by 1% each. Affirming our view on consumption demand, we
have added Dabur to our large cap portfolio. We believe that as
the softness in commodities continues oil & gas and metal
sectors would continues, continue to remain under pressure.
Following this, we have exited Reliance Industries from Large
caps.
In the large cap space we continue to remain positive on auto
infrastructure & cement. Relative to the benchmark index, we are
underweight on BFSI. With the exclusion of Reliance Industries,
we affirm our underweight stance on metals and oil & gas. With
the recent cleanup drive in PSU banks, we continue to believe the
underperformance would continue. In the private banking space,
we prefer large banks with a strong brand name and a pan India
retail presence We remain overweight to neutral on pure play
defensives (IT, FMCG) as secular earnings coupled with sector
rotation could lead to consolidation in near term valuations and
offer stock specific opportunities. We remain positive on auto,
pharma, capital goods and infrastructure.
Among individual names, given the steep discount to historic
valuations, we are strongly overweight on Infosys and TCS in the
IT space. A revival in the capex cycle coupled with lower interest
rate scenario would benefit the BFSI and construction space
(UltraTech, L&T, HDFC, HDFC Bank).
House view on Index: Following the subdued monsoon and weak
global scenario, Sensex earnings for two consecutive years
remained subdued. However, a revival of the same would lead
the Sensex EPS to grow by 12% to Rs 1542 in FY17E and 18% to
Rs 1816 in FY18E.
44
September 2016

Name of the company
Weightage(%)
Largecap Portfolio
Auto
15.0
Tata Motor DVR
4.0
Bosch
3.0
Maruti
5.0
EICHER Motors
3.0
BFSI
25.0
HDFC Bank
8.0
Axis Bank
3.0
HDFC
8.0
Bajaj Finance
6.0
Capital Goods
4.0
L&T
4.0
Cement
4.0
UltraTech Cement
4.0
FMCG/Consumer
18.0
Dabur
5.0
Marico
4.0
Asian Paints
5.0
Nestle
4.0
IT
18.0
Infosys
10.0
TCS
8.0
Media
2.0
Zee Entertainment
2.0
Pharma
14.0
Lupin
6.0
Dr Reddys
5.0
Aurobindo Pharma
3.0
Total
100.0
45
September 2016

Name of the company
Weightage(%)
Diversified Portfolio
Auto
Tata Motor DVR
Bosch
Maruti
Eicher Motors
Bharat Forge
Consumer Discretionary
Symphony
Supreme Ind
Kansai Nerolac
Pidilite
Asian Paints
Arvind
Interglobe Aviation
Rallis
BFSI
HDFC Bank
Axis Bank
HDFC
Bajaj Finance
Bajaj Finserve
Power, Infrastructure & Cement
L&T
UltraTech Cement
Ramco Cement
NBCC
Container Corporation of India
FMCG
Nestle
Marico
Dabur
Pharma
Lupin
Dr Reddys
Aurobindo Pharma
Natco Pharma
Torrent Pharma
Biocon
IT
Infosys
TCS
Media
Zee Entertainment
Total
12
3
2
4
2
2
16
2
2
2
2
4
2
2
2
19
6
2
6
4
2
12
3
3
2
2
2
9
3
3
4
16
4
4
2
2
2
2
13
7
6
1
1
98.2
46
September 2016

Name of the company
Weightage(%)
Midcap Model Portfolio

Aviation
Interglobe Aviation
Auto
Bharat Forge
BFSI
Bajaj Finserve
Cement
Ramco Cement
Consumer
Symphony
Supreme Ind
Kansai Nerolac
Pidilite
Rallis
Infrastructure
NBCC
Logistics
Container Corporation of India
Pharma
Natco Pharma
Torrent Pharma
Biocon
Textile
Arvind
Total
6.0
6.0
6.0
6.0
6.0
6.0
6.0
6.0
30.0
6.0
6.0
6.0
6.0
6.0
8.0
8.0
6.0
6.0
20.0
6.0
6.0
8.0
6.0
6.0
#REF!
ICICI Securities Ltd has received an investment banking mandate from group company of Larsen and Toubro Ltd.
The report is prepared based on publicly available information.
47
September 2016
Performance* so far Since inception
150
125
100
75
50
25
0
124.8
100.6
87.3
94.6
72.9
63.1
Portfolio
Benchmark
*Returns (in %) as on Aug 17, 2016

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio
Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination
of BSE Sensex and CNX Midcap
6400000
6400000
9338760.992
7618754.423
4500000
5429103.701
5500000
6213745.306
6500000
8749049.168
7500000
6400000
8500000
12630236.69
Value of ` 1,00,000 invested via SIP at the end of every month
3500000
Investment
Value of Investment in Portfolio
Value if invested in Benchmark
Start date of SIP: June 30, 2011; *Value as on Aug 17, 2016
48
September 2016
QUIZ TIME
1. Equity is a high-risk, high-return asset class. But investors can

expect more returns from this asset class than from any other.
True or false
2. Gold can be bought in the form of jewellery, coins, bars, bonds,
______________ and so on.
3. In general, the risk involved in an investment is directly
proportional to the ________ expected from it.
4. _____________ is the level of uncertainty that investors are willing
to tolerate to earn a profit on their investment.
5. It is important to have a ______ before you start investing.
Note: All the answers are in the stories that have appeared in this
edition of ICICIdirect Money Manager. You may send in your
answers at: moneymanager@icicisecurities.com. The answers will
be published in our next edition. The names of the earliest all correct
entries will be published too. So jog your grey cells and be quick to
send in your entries.
Correct answers for the August 2016 quiz are:
1. The Income Tax Act allows you to carry forward your Capital
losses for the next _______ financial years.
A: 8 Eight
2 India has figure among the top 10 wealthiest countries in the
word with a total individual wealth of USD _______ billion
A: 5600 billion
3. Which Section of Income Tax Act allows an additional deduction
of Rs.50,000/ towards NPS (National Pension System)
contribution?
A: 80 CCD (1B)
4. The Government is likely to ban cash deals over Rs._____ lakh
A: Rs.3 Lakh
5. As per Section 80CCE of the Income Tax Act, the aggregate
amount of deduction under Section 80C, Section 80CCC and
Section 80 CCD (1) shall not exceed Rs ______ lakh
A: Rs.1.50 lakh
Congratulations to the following winners for providing correct answers!
BSR Murthy
49
September 2016
PRIME NUMBERS
Equity Markets
Domestic Equity Indices
31-Aug-16
29-Jul-16
Change (%)
CNX Nifty
8786.2
8638.5
1.7%
CNX Midcap
15370.9
14772.8
4.0%
S&P BSE Sensex
28452.2
28051.9
1.4%
S&P BSE 100
9021.5
8856.0
1.9%
S&P BSE 200
3768.6
3692.1
2.1%
S&P BSE 500
11834.9
11586.0
2.1%
Global Equity Indices

31-Aug-16
18,400.9
2,171.0
5,213.2
6,781.5
10,592.7
4,438.2
16,887.4
22,976.9
3,085.5
9,068.9
2,820.6
Dow Jones
S&P 500
Nasdaq
FTSE
DAX
CAC 40
Nikkei
Hang Seng
Shanghai Composite
Taiwan Weighted
Straits Times
29-Jul-16
18,432.2
2,173.6
5,162.1
6,724.4
10,337.5
4,439.8
16,569.3
21,891.4
2,979.3
8,984.4
2,868.7
Change (%)
-0.2%
-0.1%
1.0%
0.8%
2.5%
0.0%
1.9%
5.0%
3.6%
0.9%
-1.7%
Sectoral Indices
31-Aug-16
29-Jul-16
Change (%)
S&P BSE Auto
22,008.2
21,091.1
4.3%
S&P BSE Bankex
22,656.6
21,678.5
4.5%
S&P BSE FMCG
4,747,204
4,694,964
1.1%
S&P BSE Healthcare
16,161.7
16,299.2
-0.8%
S&P BSE Metals
9,939.7
9,406.2
5.7%
S&P BSE Oil & Gas
11,072.7
10,595.2
4.5%
S&P BSE Power
2,098.4
2,076.6
1.1%
S&P BSE Realty
1,542.1
1,607.1
-4.0%
S&P BSE Teck
5,753.3
5,951.1
-3.3%
50
September 2016
PRIME NUMBERS
Volatility Index (VIX)
31-Aug-16
VIX
13.24
29-July-16
Change (%)
14.92
0%
Debt Markets
Government Securities (G-Sec) Yields (in %) Aug-16
Jul-16
10 year
7.17
7.11
Change (bps)
-6
5 year
7.02
7.05
-3
3 year
6.88
6.91
-3
1 year
6.82
6.82
Corporate Bond Yields (in %)
Aug-16 Jul-16
AAA 10 year
7.80
8.10
Change (bps)
-30
AAA 5 year
7.68
7.95
-27
AAA 3 year
7.60
7.82
-22
AAA 1 year
7.50
7.64
-14
AA 10 year
8.37
8.69
-32
AA 5 year
8.23
8.48
-25
AA 3 year
8.17
8.36
-19
AA 1 year
8.07
8.18
-11
Commercial Paper (CP) Rates (in %)
Aug-16 Jul-16
Change (bps)
12 Months
7.71
8.01
-30
6 Months
7.34
7.70
-36
3 Months
7.00
7.28
-28
1 Month
6.84
7.00
-16
Treasury Bill (T-Bills) Yields (in %)
Aug-16 Jul-16
Change (bps)
91D TB
6.55
6.53
182D TB
6.64
6.69
-5
364D TB
6.68
6.73
-5
51
September 2016
PRIME NUMBERS
10-year benchmark yields (%) across countries
Countries
US
UK
Japan
Spain
Germany
31-Aug-16
29-Jul-16
Change in bps
1.58
1.45
13
0.64
0.69
(4)
(0.06)
(0.19)
13
1.01
1.02
(0)
(0.07)
(0.12)
France
0.18
0.10
Italy
1.15
1.17
(2)
Brazil
12.08
11.81
27
China
2.81
2.80
India
7.11
7.17
(6)
MF Investment
Equity
Debt
Aug-16
1428
19793
Jul-16
557
14251
YTD
10216
228884
FII Investment
Aug-16
Jul-16
YTD
Equity
9786
11339
40668
Debt
-2949
6965
-9217
Macro-economic Indicators
Consumer price index (CPI)
Items
Food&bev.
Pan,tob& intox.
Cloth & Foot
Housing
Fuel & light
Misc.
CPI
Weights(%)
45.86
2.38
6.53
10.07
6.84
28.31
100
Jun-16
6.29
8.04
5.56
5.37
3.03
4.26
5.77
Jul-16
7.20
7.66
5.37
5.35
2.94
3.96
6.07
Aug-16
7.46
7.35
5.01
5.46
2.92
3.85
5.13
Wholesale price index (WPI)

Month
WPI
Primary Articles
Fuel & Power
Manufactured Goods
Weights
100.0
20.1
14.9
65.0
52
Aug-15
-5.06
-4.21
-16.21
-1.99
Jul-16
3.55
9.38
-1.00
1.82
Aug-16
3.74
7.47
1.62
2.42
September 2016
PRIME NUMBERS
Index of industrial production (IIP) Sector-wise growth rate (%)
Categories
Mining
Manufacturing
Electricity
16-Jul-16
0.8
-3.4
1.6
16-Jun-16
5.3
0.7
8.3
16-May-16
1.4
0.6
4.7
Weight(%)
14.2
75.5
10.3
Currencies and Commodities

Currencies
31-Aug-16
66.96
74.58
87.98
50.35
68.10
0.65
10.03
USDINR
EURINR
GBPINR
AUDINR
CHFINR
JPYINR
CNYINR
29-Jul-16
67.00
74.44
88.28
50.37
68.70
0.65
10.10
Change (%)
0.0%
-0.2%
0.3%
0.0%
0.9%
-0.3%
0.7%
Status
Appreciated
Depreciated
Appreciated
Appreciated
Appreciated
Depreciated
Appreciated
Commodities
Crude ($/barrel)
Gold ($/ounce)
31-Aug-16
47.0
1,309.0
29-Jul-16
42.5
1,351.0
Change (%)
10.8%
-3.1%
Mutual Funds: Category Average Returns

Tenure
Equity Funds Returns (in %)

Large-cap
Mid-cap &
Small-cap
Funds
Funds
Diversified Funds
6 months
1 year
3 year
5 year
30.92
13.17
27.53
16.53
35.41
15.68
40.68
22.86
ELSS (Taxsavingfunds)
28.59
11.34
22.17
14.35
30.66
11.93
26.46
16.30
Returns as on July 29, 2016
Debt Funds Returns (in %)

Tenure
6 months
Liquid Funds Short-term

income funds
7.52
Ultra shortterm funds
Long-term
income funds
9.39
15.48
11.52
Gilt funds
18.74
1 year
7.56
9.09
8.39
10.34
12.17
3 year
8.38
9.74
9.07
10.40
11.18
Returns as on August 31, 2016
Sources for above data: Bloomberg, Reuters, CRISIL, MOSPI, ICICIdirect.com

Research
53
September 2016
Premium Education Programmes Schedule

ICICIdirect Centre for Financial Learning (ICFL) imparts quality education on
financial markets to beginners and amateurs, student, housewives, working
professionals and self employed. ICFL's broad objective is to make participant
feel confident to start investing in stock market.
Here is the list of our programmes scheduled for the month of August, 2016.
Schedule for Advanced Portfolio Management Programme
Sr.
No
1
City
Dates
New Delhi
17th Sept to 19th Sept 2016
For More Information & Registration call:

Harneet on 9528152693
Schedule for Beginners Program on Futures and Options (F&O) Trading

Sr.
No
City
Dates
Mumbai
24th Sept & 25th Sept 2016
Kusmakar on 7875442311
New Delhi
Schedule for CFP Certification training through Virtual class

Sr.
No
City
Dates
Bangalore
21st Sept to 29th Sept 2016
Subrata on 9620001478
Chennai
Abdul on 8939930837
Schedule for Fast Track Program on Futures and Options (F&O)

Sr.
No
City
Dates
Ajmer
25th Sept 2016
Yogesh on 8238053563
Jodhpur
18th Sept 2016
Pondicherry
25th Sept 2016
Abdul on 8939930837
Schedule for Fast Track Program on Technical Analysis

Sr.
No
City
Dates
Bhubaneshwar
4th Sept 2016
Jayeeta on 9007391920
10
Vijaywada
4th Sept 2016
Ruchi on 8297362323
11
Vijaywada
18th Sept 2016
Ruchi on 8297362323
Schedule for Foundation Programme on Stock Investing

Sr.
No
City
Dates

12
Bangalore
13
Chennai
3rd Sept & 4th Sept 2016
Abdul on 8939930837
14
Chennai
Abdul on 8939930837
15
Hyderabad
Ruchi on 8297362323
16
Jaipur
24th Sept 2016
Nagpur
Navi Mumbai 17th Sept & 18th Sept 2016
17
18
19
New Delhi
20
Pune
21
Thane
Manish on 8451057943
54
September 2016
Schedule for Professional Trader & Investor Programme

Sr.
No
City
Dates
22
Ahmedabad
23rd Sept to 27th Sept 2016
Yogesh on 8238053563
23
Bangalore
24
Chennai
3rd Sept to 7th Sept 2016
Abdul on 8939930837
Schedule for Technical Analysis

Sr.
No
City
Dates
25
Chennai
Abdul on 8939930837
26
Chennai
Abdul on 8939930837
27
Hyderabad
Ruchi on 8297362323
28
Pune
Contact us
Email:
Send us an email at learning@icicisecurities.com
Please mention the name, date and venue of the programme you have
attended or wish to attend, for faster resolution of your queries.
SMS:
SMS EDU to 5676766 for more details
55
September 2016
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59

Factors like investor's age, tenure of the investment, risk tolerance,

ICICIdirect Money Manager

In order to make most of the opportunity it is important for an

Abhishake Mathur, CFA

Sameer Chavan, CWM, Pankaj Pandey

Nithyakumar VP CFPCM, Sachin Jain, Research Team

ICICIdirect Money Manager

ICICIdirect Money Manager

India's economy growth

FATCA: Mutual fund accounts would not be closed

Canada's Province of British Columbia to issue a masala bond

EPFO subscribers may get a lower interest at a rate

ICICIdirect Money Manager

Biocon - Biosimilars progress getting momentum

but with higher profitability in

the biosimilars front over the last

Branded formulations growth space

ICICIdirect Money Manager

Adj. Net Profit

Adj. EPS (`)

Price to book (x)

Equity capital (`Crore)

Face value (`)

FII Holding (%)

Key risks include:

Lispro and Aspart). Four of its

Backtracking by Mylan may increase

MRPL Entering the complex league

` 2105.5 crore in FY17E &

Improvement in global cracks to

Expect higher capacity utilisation

ICICIdirect Money Manager

52 week H/L (|)

FII Holding (%)

DII Holding (%)

Key risks include:

Volatility in crude oil prices & exchange rate

Decline in refining margins

ICICIdirect Money Manager

FLAVOUR OF THE MONTH

Understanding Asset Classes

Companies require a lot of

When similar types of

With these shares, you can

There are six main asset classes.

Risk-return trade-off: Equity is

FLAVOUR OF THE MONTH

entities promise to pay a

Effect of inflation: Equities are

Opt for this asset class to meet

Risk-return trade-off: This is a

o Dividend: payments made

Effect of inflation: The inflation

FLAVOUR OF THE MONTH

there is no or negligible risk in

Debt vehicles: Fixed deposits,

Earning profit: Cash offers zero

Cash vehicles: Savings

Risk-return trade-off: Cash is a

FLAVOUR OF THE MONTH

has an emotional aspect for

Risk-return trade-off: Owning

Risk-return trade-off: The risk